KeyBank has exited the indirect retail auto loan business, selling its$3.2 billion portfolio to a subsidiary managed by Waterfall Asset Management.
Neither the name of the subsidiary nor the transaction terms were disclosed in an announcement last week. Waterfall did not respond to a request for comment.
"While we did sell our remaining portfolio, we will continue to service the loans, which means the end client will not experience any meaningful change," KeyBank spokesman Jeff Kew wrote in an email Tuesday.
Parent company KeyCorp announced in October 2020 that KeyBank would stop issuing new indirect auto loans, predicting what was then an approximately $4.6 billion portfolio "will run off over time."
"This decision to exit the indirect retail auto lending business is about aligning to our relationship strategy," Kew wrote Tuesday.
Kew said KeyBank would remain a floorplan lender, and Friday's sale did not affect its dealer customers.
"This sale does not impact our commitment to the dealer finance business," Kew wrote. "Our clients will continue to have access to our industry expertise, tailored financial solutions and dedicated team of sales, service and credit experts who will work hard for them."
KeyCorp described Friday's sale as a means of producing capital for a stock buyback. The same day, the company bought $2.8 billion of debt using the auto loans as collateral, and cut a deal to purchase up to 2.5 percent of its common stock for as much as $585 million.
"We are committed to returning capital to our shareholders, and our share repurchase program is an important part of that commitment," CFO Don Kimble said in a statement Monday. "The ASR transaction, which was aided by the capital generated from the sale of the indirect retail auto loan portfolio, further demonstrates our commitment to maximizing shareholder value."